NuScale Power (SMR 0.36%) is a money-losing start-up today, but there is huge promise ahead, and the next five years could see a massive change in corporate direction. That sea change could start at the end of this year, but the real example of what NuScale's business is capable of won't take place until the end of the decade.
Here's where NuScale Power could be in five years.
What does NuScale Power do?
NuScale Power is currently seeking approval from the U.S. government to build small-scale modular nuclear reactors. It's further along in this process than any other company attempting the same thing, with the CEO frequently stating that the company is the "first and only small modular reactor technology to receive NRC [] design approval and certification."
Image source: Getty Images.
That won't last forever. There are many other companies working on similar technology, and even a few working on even more advanced technologies. But NuScale has the lead today, and that means it's likely to be the first to market with its small-scale modular nuclear power plants. Having the first-mover advantage could be a big deal, given the increasing demand for electricity in the world.
NuScale is already starting to build some of the components of its reactors in preparation for delivery. It's also worth noting that it has the backing of construction firm Fluor (FLR 15.21%), which is the largest shareholder of NuScale, and it is partners with steelmaker Nucor (NUE +0.35%). Relationships like these will help NuScale Power get its technology tested and built, as they involve both suppliers and potential customers.
But the big story to watch in 2025 is the approval process for a nuclear power plant in Romania that will use NuScale Power's small-scale modular nuclear reactors. This has major implications for the next five years.
What happens in 2025 will help dictate what 2030 looks like
Specifically, RoPower is looking to use six of NuScale Power's reactors chained together to create a 462-megawatt nuclear power station. If that project gets the green light, it won't simply open the next day. It will take several years to build, likely with Fluor in the lead, pushing the construction process out to around the end of the decade. The parts that NuScale is building today are for that installation and include some of the pieces that take the longest to construct. The hope is that it can hit the ground running if the project gets approved.
NYSE: SMR
Key Data Points
A lot of things will be learned along the way, given that this will be the first commercial installation of NuScale's technology. But this process will, ultimately, end up being the blueprint for the next installation. NuScale is also preparing for that today, because it has started the process of acquiring parts for an additional six small-scale nuclear reactors. It isn't actually building them, but simply pre-ordering the parts that take the longest to make so it can start more quickly when it gets orders.
The next five years will be pivotal to NuScale Power's future. The company must show that it can commercially sell small-scale nuclear reactors, what the process of building and installing them is like, and whether other companies are willing to join RoPower in buying them. The rubber is hitting the road this year, but what that road actually looks like will be learned over the next five years.
A high-risk play, but one with potential
Risk-averse investors should not buy NuScale Power. At the moment, it's a money-losing start-up with technology that has yet to be fully tested in the real world. These two facts won't change in 2025, even if RoPower gets the green light to use small-scale modular nuclear reactors in Romania. However, the story is just now getting to the point where NuScale Power can prove to the world -- and, more importantly, investors -- that it has a real business. Given the lead times involved, that proof will only be revealed over the next five years.
